Yes Bank’s shares fell on Thursday after the bank released its business update for the September quarter (Q2). While the private lender reported solid growth in both deposits and loans year-on-year (YoY), a drop in its liquidity coverage ratio (LCR) raised concerns among investors.
Q2 Highlights
In its update, Yes Bank announced an 18.3% YoY increase in total deposits, reaching ₹2,77,173 crore compared to ₹2,34,360 crore last year. However, this growth was slower than the 20.9% increase reported in the previous quarter. Sequentially, deposits grew by 4.6%, indicating steady growth but at a slower pace.
For loans and advances, the bank saw a 13.1% YoY rise, totaling ₹2,36,512 crore compared to ₹2,09,106 crore last year. This was also a slight decline from the 14.8% growth reported in the previous quarter, with a 3% sequential increase over ₹2,29,565 crore in June.
Yes Bank also noted a significant increase in Current Account and Savings Account (CASA) deposits, which rose 28.4% YoY to ₹88,559 crore, up 8.6% from the June quarter. The CASA ratio improved to 32%, up from 29.4% last year, showing the bank’s efforts to increase its low-cost deposits.
Concerns Over Liquidity
One troubling sign was the decline in the bank’s liquidity coverage ratio (LCR), which fell to 131.9% in Q2 from 137.8% in the previous quarter. While still above last year’s 120.9%, the drop raised concerns about the bank’s liquidity position.
The credit-to-deposit (C-D) ratio also declined to 85.3%, down from 86.6% in the previous quarter, indicating the bank is lending a smaller portion of its deposits. This could suggest a cautious lending approach.
Stock Performance
Following the update, Yes Bank’s stock price dipped 1.6% to an intra-day low of ₹22.05. The stock is currently 33% below its 52-week high of ₹32.81 reached in February but has risen over 56% from its 52-week low of ₹14.10 last October.
Over the past year, Yes Bank’s stock has gained over 30%, but it’s only up around 3% in 2024 so far. The stock saw a 5% decline in September following an 11% drop in August.
Overall, Yes Bank’s Q2 update showed steady growth in deposits and advances, with improved CASA ratios. However, concerns about liquidity and a lower credit-deposit ratio likely contributed to the stock’s decline. The bank’s next moves to address these issues will be important to watch.
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